Medicare Briefing Examines Hospital Trend To Observe Rather Than Admit

A briefing last week in Washington D.C. reviewed hospital admissions of Medicare patients following a recent report that some facilities may keep seniors in “observation,” rather than admitting them.

A recent report released by AARP challenges what it calls the growing movement by hospitals for observation over admission. The briefing was aired nationally on the C-SPAN television network.  

“Hospital emergency rooms sometimes ask patients to stay for observation before being admitted or sent home,” the report said. Observation status can be appropriate, the report said, but Medicare patients may be more likely to be observed, since Medicare makes distinctions between observation and inpatient status.

According to the AARP study, inpatient stays declined by about 16%, while the ratio of observation stay use to inpatient stays increased by 94%. The study also said the duration of observational stays also increased.

“The magnitude of these changes raises concern that observation is becoming a substitute for inpatient admission and that some observational stays may be of questionable clinical benefit,” the report said.

Linda Fishman, senior vice president for public policy analysis for the American Hospital Association, spoke at the Capitol Hill briefing, saying hospitals are being challenged by the recent CMS two-midnight rule limiting stays for Medicare patients.

Fishman said the CMS rules put hospitals in a bad position, and that could compromise quality of care for Medicare patients, making them spend too much time waiting in the emergency department, she said.

CMS instituted a new regulation on Oct.1that generally considers patients in hospitals for two midnights in a row to be inpatients qualifying for payment under Medicare Part A. Patients in hospitals for less than two midnights are generally considered outpatients and require different billing.

The main motivator to keep Medicare patients on observation status is money, the AARP report said.

“Unlike inpatient coverage, there is no cap on beneficiary cost-sharing for observation status visits,” the report said. “In some cases, Medicare cost-sharing for outpatient services … may be greater than the inpatient deductible that beneficiaries would incur when admitted.”

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